Taiwan's technology sector is expected to move toward branded products, IC design and materials science in the next 12 years as it continues to mature and develop, a veteran industry watcher said yesterday.
In a speech entitled "Infrastructure in Place for Further Expansion," Peter Kurz (
Kurz, managing director and head of research of Citigroup Global Markets Inc's Taipei branch, has been closely following developments in the local industry for about two decades.
Kurz warned that local companies making the transition from being an original equipment manufacturer (OEM) to an original brand manufacturer run the risk of conflict of interests with their branded customers.
As a result, some domestic companies, such as Acer Inc and Asustek Computer (華碩電腦), spun off their OEM businesses into separate companies, Kurz said in the speech at the American Chamber of Commerce in Taipei.
Although China has more design engineers, Taiwan offers better hardware and software infrastructure support thanks in part to a competitive IC design sector, he said.
Nonetheless, Taiwanese companies that have set up production bases in China also lend valuable support to Taiwan-based firms, he said.
Kurz said the nation was able to build the world's largest production capacity for thin-film-transistor liquid-crystal-displays (TFT-LCD) because there was ready-made downstream demand -- the IT hardware facilities that had relocated to China.
These manufacturing facilities should further support the development of IC design, specialty materials and branded products in Taiwan, he said.
As for materials science, Kurz expects the domestic solar panel industry to move into the production of higher-quality polysilicon, which is in short supply worldwide.
But the main challenge for the nation's materials-based industries lies in the management of advanced-generation production facilities, Kurz said.
Biotechnology is also expected to become a driver for economic growth, Kurz said, as Taiwan has a sufficient supply of human proteins and tissue samples to aid its medical experiments.
In the next 12 years, Taiwan can use this advantage to focus on discovering new drugs, which requires less investment compared to conducting clinical trials. Local companies can look for partnerships with US companies to aid them in clinical trials, manufacturing and distribution, Kurz said.
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